Nathaniel:Thank you for tuning in. Today we’re joined by Jeff McMillan, Managing Director of Investment Products and Services at Morgan Stanley Wealth Management.Jeff is a West Point graduate who, following his service for his country, has spent his entire career in banking and financial services.

Prior to joining Morgan Stanley Wealth Management, Jeff was head of Product Strategy for Bank of America Merrill Lynch Research. There he led their strategic efforts for the research division to include the development of research-based products as well as the monetization of research content.

Jeff is also a keynote speaker at this year’s BPM in Banking Executive Symposium where he will discuss how Morgan Stanley leverages data and analytics to drive better business performance and customer experience. Jeff, thanks for joining us.

Jeff: Thank you, Nathaniel. I think what’s really interesting right now with what’s happening not just within financial services, but candidly, the world, is that the last 15-20 years have been really focused on massively automating core processes within businesses, doing things faster, better and cheaper.

As a byproduct of that, two things happen. One is there was a massive amount of content and data that I would describe as being created out of this growth from a processing perspective. At the same time, tools came along in the big data space that allowed people for the first time to really understand and try to make sense of what this was.

What I personally found very interesting is the confluence of those events are driving really I think a transformational reform that’s taking place right now, again, not just across the world. I think that the firms that (a) understand that this transformation is taking place and (b) rethink how they organize themselves, how they conduct their business, to really maximize their ability to leverage both this type of intelligence are the ones that are going to win over the next 10-15 years.

Nathaniel: So it’s moving to a truly data-driven organization?

Jeff: Yeah. I use the words “intelligent organizations” because we all have tons of data. The challenge is less about which tool you use to aggregate the content. The challenge is how you draw insights out of all the stuff that’s sitting around in different silos.

I talk about this all the time. It’s not about the algorithm. It becomes less a technology problem, because candidly, there are so many high-quality providers in this space that can help you solve the problem. It really becomes an organizational question in terms of how you identify the business problems you’re really trying to focus on, and then organizing your data and analytic resources in a way to drive decision-making as deep into the organization as possible.

Most organizations are actually built not to share. They’re focused on building individual groups of power, which is really based around my understanding or my knowledge of something that you don’t have. There’s I think in many organizations a perception that if I give my information away that somehow I’m diminishing my own value.

I think the reality is if you want to win in this space, it’s the complete opposite. You have to be willing to democratize data. You have to be willing to push information as deep into the organization as possible, so that at the point of client interaction, at the point of decision- making by the most junior administration person who’s sitting on the phone somewhere, that they’re empowered with the best analysis that’s available to help them make the best choices that they can.

Nathaniel: So, transparency, in a word.

Jeff: Yeah. Transparency is everything. It’s a scary thing sometimes, because sometimes what will happen is the things that you actually see, when you actually learn what’s going on in your organization, you don’t always like what you see and it puts a light on behaviors and sacred cows that people have held. There are these massive assumptions that exist in many organizations that, candidly, are just simply not true.

But, until now, you’ve never had the light to shine on the fact that maybe things that we thought that were just facts actually are not. Maybe they were facts in certain circumstances, but in other circumstances, they simply weren’t. And really giving people not only tools, but the courage to ask really hard questions and to be open to a culture where finding out that things that we do aren’t good, that we reward that as much as the things that actually work. Candidly, there’s value in both, and historically, we tend to migrate towards the things that work and we kind of ignore the things that don’t. But I would argue that knowing what doesn’t work is probably just as valuable as what does.

Nathaniel: There’s a whole story hidden in what you’re saying. The culture of hiding the bad news and pushing it out for another quarter, that is arguably what led to the challenges that we saw in 2008-2009, would you say?

Jeff:Yeah. I would argue that data is one piece of that. I think that there certainly was a lack of transparency as to what people owned, and I suspect that there were individuals in many cases that maybe they had that information that weren’t open to sharing it. There were a lot of failures across the board.

But I think you’re absolutely right to say not that having better information would have prevented a market correction, because I don’t necessarily believe that would be true, but I think that companies that had better transparency and analytics as to what really was going on were better able to navigate those environments without question.

Nathaniel: And I wasn’t suggesting prevention of a market correction, but really it’s a matter of how you come out of that correction.

Jeff: Right. Again, creating a culture where fact-based decisions drive. I don’t know how many times people have sent me in a situation where they’ll come back from a really positive meeting or really negative meeting with a single customer and they will say, “This is the single biggest problem we have at the firm. We need to fix this.”

And if it’s the CEO, people tend to scramble and move around; whereas in a fact-based environment we would come back with feedback and test those assumptions. We would conduct rigorous testing around whether or not the efficacy of that statement to be true or not. We would really take multiple avenues to do our very best. Not to say that we get it right – there’s always imprecision in everything that we do as organizations – but really not trying to be right, but trying to find what is right and really trying to drive that culture of we really want to get to the very best answer.

And that could be my answer or it could be your answer or it could be somebody else’s, but we’re focused on the best outcome for our organization as opposed to trying to position my personal point of view or your personal point of view, whatever that may be.

Nathaniel: Goal-driven processes and operations, being able to tie operations to the stated goals is really the Holy Grail today in process management. From an analytic standpoint, do you see the same factors driving that?

Jeff: Process management and data analysis I actually think are almost the same thing. I would argue that you can’t achieve any transformational change to your business without a strong focus on both of them. I think they’re just two sides of the same coin.

But clearly the mistake that people make constantly is the shiny object syndrome where someone comes along with the latest and greatest data visualization tool or algorithmic tool and they kind of walk around the organization saying, “I can solve any problem that you have.” And it’s nice that you can solve any problem, but I actually only need to solve the one or two problems that I actually have.

The disconnect is that the people who understand the tools don’t understand the business problem, and the people who understand the business problem don’t understand the tools. The elegance is bringing those constituencies together in a way that clearly defines the problem you’re trying to solve, the measurable results that you’re trying to achieve, and then once you have those things, then you can execute on whether it be your k-means clustering analysis or whatever else you want to do. Then you have a framework to say, “I have achieved that goal,” “I have not achieved that goal,” or “The goal that I originally had was actually the wrong goal and I can adjust it.”

But I think it’s the classic mistake that we just jump into some BPM initiative or some analytical initiative without the framework of a clearly-defined business problem, and you spend millions of dollars and you waste a lot of people’s time. And candidly, oftentimes you don’t even get an answer.

Nathaniel: We may be seeing some of that now with the drive towards digitization and digital transformation being an area that getting momentum, getting funding – we’re seeing studies like what McKinsey just came out with really talking down the level of digitization that has occurred in the banking industry. No doubt, pressure on that, it will continue to drive that. What I’m not seeing in most digital discussions is really what that business strategy is behind that, other than faster, more responsive, all the platitudes that we would otherwise seek, connecting that to an actual business process or business scenario. Do you see that same issue around digital transformation?

Jeff: I completely agree. It’s no different than in the late ‘90s where everyone had their head of Internet strategy and everyone needed to build website. They built their website and then they all looked at it, and every three days someone would click on it.

It’s no different than saying we’re going to have a fax strategy. We don’t have Internet strategies. We don’t have website strategy. We have customers and we have products, and then we have an infrastructure that delivers those things.

I’m a big believer that either you’re focusing on your cost, you’re focusing on the quality of your product or you’re actually trying to do it just as cheaply as you possibly can. And those things are the things you need to focus on. In some cases, it may drive for a very sophisticated mobile capability. In other cases, it may be focused on putting more people on the ground to talk to clients, because that’s what you actually need to do.

Clearly I’m not going to in any way repute the need for greater mobility. When people talk about millennial point, I think it’s not even about millennials. I think there’s a need for clients to have greater self-engagement in the financial services world. There’s no question that they want to be able to do more on their own without having to pick up the phone and call their advisor.

And what we, as an organization, really want to do or how do we extend the financial advisor’s engagement through those digital properties? Ultimately, our model is about a relationship that people have with another human being, and enriching that relationship through social media, through more high-end self-service web analytics so the people engage with our own portfolio in a more sophisticated way.

I think you’ve got to build it around the client, in our world, financial advisor relationship, because anything else other than that just becomes another digital exercise that doesn’t really achieve the results.

Nathaniel: At our upcoming event, Jim Sinur is going to talk about the role of intelligent agents and how that’s transforming customer engagement. We saw that with inferencing systems and other things, particularly in that window of the late ‘90s where there was the move to push customer service to self-service. What we’ve found was there was a lot of customer disengagement and dissatisfaction with the process.

It has to be driven by data, by rules, by process and that’s a lot of what Jim is going to be talking about: this new role of intelligent processes and the role of intelligent agents in that. Are you seeing any early experimentation around that in terms of how you get the data behind analytics? I appreciate your caveat on going beyond data. It’s really the meaning and the context behind that data that help drive decisions in a self-service scenario. It still seems to be far off, but where would you say we are in that in the market?

Jeff: I think the strategy of trying to – and someone will actually figure this one out – but the strategy of trying to completely go to some artificial intelligence-based call center approach. Clearly there’s lots of focus on that. You look at the Watsons of the world and many others out there who are trying to do that. I think, ultimately, that will move, but I think it will probably take longer than any of us think it will. And maybe I’ll be proven wrong on that.

But I think, for today, what happens three years from now is still far away. No one in this business is able to think that long out, because we’ve got immediate client needs and we have to deliver on those and that’s obviously the challenge for all of us.

But I think the question is not about how artificial agents will replace human interaction. I think the question is: how do you give employees better information at the point of sale, at the point of client interaction, to help make that call shorter, make that call richer for the client, solve and that problem?

That’s where all our focus is on. Our focus is how we give our financial advisors the best intelligence, so that when you call that FA and you say, “Listen, I need $5000 because we’re going to take a vacation. I need to take a few extra dollars out and I need to liquidate some positions,” at that point, that financial advisor is not only talking about the best way to do that but is armed with all the market intelligence based on your historical behavior, based on what’s happening right now in your portfolio and what the investment advice is across the hundreds of investment ideas that exist, or thousands of investment ideas that exist every day.

At that point in conversation is bring all that intelligence together to make a really good financial choice for you. That’s where I think the focus, at least for our organization, is because we believe that that has enormous potential. It’s good for clients. It makes our advisors better, more efficient, and results in a better financial outcome for clients.

I think there’s an interesting conversation to be had around where this ultimately goes, but for now, the best that we’re making is around empowering smart, capable people with better information to help them deliver a better service.

Nathaniel: Thank you, Jeff. That’s not only a great story; that’s a really compelling vision. You’ve got me very excited about your keynote now. I appreciate you joining us today and I really appreciate you keynoting our event. I know many are excited to see you.

Jeff: Sure. Thank you very much.

Nathaniel: Thank you. That concludes our podcast. Don’t forget to join us at BPM in Banking, Finance and Insurance coming up September 29th through October 2nd in Chicago, where you can see Jeff, myself, Jim Sinur and many others. Again, thank you for tuning in. I hope to see you in Chicago.

Rated as the #1 Most Influential Thought Leader in Business Process Management (BPM) by independent research, Nathaniel Palmer is recognized as one of the early originators of BPM, and has led the design for some of the industry’s largest-scale and most complex projects involving investments of $200 Million or more. Today he is the Editor-in-Chief of BPM.com, as well as the Executive Director of the Workflow Management Coalition, as well as VP and CTO of BPM, Inc. Previously he had been the BPM Practice Director of SRA International, and prior to that Director, Business Consulting for Perot Systems Corp, as well as spent over a decade with Delphi Group serving as VP and CTO. He frequently tops the lists of the most recognized names in his field, and was the first individual named as Laureate in Workflow. Nathaniel has authored or co-authored a dozen books on process innovation and business transformation, including “Intelligent BPM” (2013), “How Knowledge Workers Get Things Done” (2012), “Social BPM” (2011), “Mastering the Unpredictable” (2008) which reached #2 on the Amazon.com Best Seller’s List, “Excellence in Practice” (2007), “Encyclopedia of Database Systems” (2007) and “The X-Economy” (2001). He has been featured in numerous media ranging from Fortune to The New York Times to National Public Radio. Nathaniel holds a DISCO Secret Clearance as well as a Position of Trust with in the U.S. federal government.